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Glyn Moody writes "According to one story about Google's attempts to launch its own music service, 'the search giant is "disgusted" with the labels, so much so that they are seriously considering following Amazon's lead and launching their music cloud service without label licenses.' So here's a simple solution: Google should just buy the major record labels — all of them. It could afford them — people tend to forget that the music industry is actually relatively small in economic terms, but wields a disproportionate influence with policy makers. Buying them would solve that problem too."

Or they'll turn it into a fair business that doesn't attack it's customers?

no no, clearly they must be evil.

That can't happen. The valuation of the music labels is too high for there to be any profit in buying them, then changing their business model so that they make less money. Remember, Google is a for profit company with shareholders. They can't purchase something expensive, hemorrhage cash on it, and expect the shareholders to accept that. It seems that the legacy business model of the labels just isn't viable with cost of reproduction and cost of distribution (even cost of storage) approaching zero. So, sto

Pretty much all of the evidence shows that if the record industry adapted with the times their profit margins would increase.

The same holds true for the movie industry.

The music companies basically handed over a huge chunk of potential profit to Apple instead of opening their own online store. In the same way, the movie studios let every other company make a lot of money renting movies (with Netflix being analogous to Apple for music) instead of taking the profit for themselves.

The reason both industries did this is that when they previously tried to do similar things, they made it so useless to consumers (*cough* "Plays for Sur

So much cheaper for Google to buy the US government and simply shorten copyright terms back to the original period on a global basis. Google seems to do well in a open market. As for the investment in buying the US government, it is pretty obvious you can get double or more it back in tax payer subsidies once you've made the purchase so, double plus bonus.

PS the 'don't be evil' was changed by goggle to don't need to be evil' some time back. So they just need to get back their investment in subsidies and

Remember, Google is a for profit company with shareholders. They can't purchase something expensive, hemorrhage cash on it, and expect the shareholders to accept that.

... like Youtube?

Youtube fits Google's business, which is advertising. More eyeballs to view ads that are along side the content. If they got into the business of selling music where would the ads go? The music store would not be enough, that is too infrequent a stop. They can't put it along side the content like all their other "side" ventures.

True, but we already have an oligopoly (major labels) that only exists because of state-backed monopolies (copyright), and the purposes of the acquisition would be to reverse the harm that said oligopoly has caused. In this hypothetical, Google might not even be trying to make any money off of the acquisition, since basically, the music industry's pigheadedness costs them more than the value of the music industry.

They could buy one major and lead by example. It'd probably be all that's needed to drag them all into the 21th century. I'm not sure I'd trust Google not to use the opportunity to take a low blow at Apple though and that's one thing the industry doesn't need.

The music biz, and a low blow would be something like locking Apple out of catalogues through pricing or by just not allowing them on iTunes. Apple's the one who for the large part made buying music on the net legit, popular and reasonably priced through the iTunes store. If Google moved in to the music business and they started to feud, carrying the fight from the computing industry over into the music business, it would strengthen the position of the traditional music companies that Apple has succeeded to cow into making concessions. That wouldn't be good for consumers I think.

I don't know of the CDBaby story. I googled it and it just came up with a one-sided story [sivers.org] by the CDBaby founder, 7 years after the fact. I'm not saying it didn't happen that way, there's a ton of stories like that and Jobs can certainly be a ruthless bastard, but anyway it worked out OK for them in the end it seems.

Why would it be a bad thing for them to (sorry) take a bite out of Apple? Apple has done nothing but bad lately.

Not in the music biz they haven't. Apple's been able to force the traditional music companies into making concessions and IMHO has been a pretty positive force for modernization from a consumer perspective.

Yes, but they could buy one major label and have it work in a less evil manner. If that turns out to be profitable and/or attractive to the talent then the others will be forced to follow suit to compete. There would have to be some compelling reason to give the the shareholders (and the only reason most of them will find compelling is "it'll make us a pile more cash"), of course, and Google would have to be careful not to change things to far from the beaten track too quickly lest they get hauled in front of a court to prove they are not abusing their position in other markets.

Sure beats having the labels rewrite laws to do their thing. If Google made some client that advertised at you while you downloaded music for free it would make them a mint, artists would get paid, and consumers would get their music without funding an industry that is bent on removing their rights.

'Free Services' are all about delivering an audience. They are not really free, the costs are carried by the advertisers who gain customers who buy stuff from them and thus increase the revenues and profits of the company that advertises.

If you compare with advertising fliers getting 2,000 fliers printed might cost 13 cents a flier so $260 is invested in the fliers + the cost of delivering them maybe $50 or so to get them dropped in mail boxes. If you generate 50% profit on your sales (a bit optimistic

going by RIAA court cases, they will claim probably more then 1000x what they are actually worth..

But what would stop google from doing a hostile take-over? all it takes would be to convince a few key share-holders that the music industry is going down and they wont see a good return on their investments anyway, give them twice the tradingprice per share, and you can be the owner of a recordcompany quicker then you can actually say record company.

All Google has to do is BECOME a music label, by offering better contracts, more royalties, better artists rights, world wide reach, world wide digital distribution. Add DRM free any-platform playable formats via a free on-line music locker. Allow you to download to any device having your Google credentials installed, and stop worrying about the piracy. Partner with music stores (remember them?) or Best-Buy type geek stores or Walmart, for burn-to-cd (or stick, or MicroSD) while you wait for those people wanting physical media without doing it themselves.

Sign a few big names, and watch people jump ship from the labels. Artists are just as sick of the Labels as the rest of us.

Few companies have Google's reach. They are about the only company that could do this, but even they would need partners for world wide direct to media outlets. At least until they put up Google Media Kiosks in every mall.

You'd consider buying a record label because you're buying a catalog of existing recordings, contracts with current artists for their future recordings, and a bunch of employees who know how to do all the marketing and distribution. (Not that you necessarily want them to do exactly what they've been doing before -- but it's a lot easier than hiring them one by one.) Even if it's partly broken, it might be faster and cheaper than starting your own publishing business from scratch.

The libraries aren't broken, that's what Google wants. The good music is stuff that's older and established, and for Google to stream that they have to make a deal with the labels, who aggregate the key rights holders.

All Google has to do is BECOME a music label, by offering better contracts, more royalties, better artists rights, world wide reach, world wide digital distribution.

Big G could care less about new music, artists have to be found, promoted, and then once they finally get popular they just start their own labels and sell the music themselves. Nobody wants to get into the recording industry now, all of this wrangling is over music that the record companies hold the key distro rights to. Because of utterly destructive copyright extensions in the US, the music business is now 95% about controlling library rights and 5% developing new acts. Occasionally there are co-branding deals with retail outlets a la Paul McCartney and Starbucks [foxnews.com], but these are just for sales, not for distribution, no "big acts" worth their beans ever signs away rights, let alone to a Google.

What does Google know about entertainment promoting? That's what production is now; it isn't just as easy as putting up a ton of music on YouTube, 90% of music promotion is telling people what to like, and Google has shown very little skill at consumer marketing or trendsetting; just because they know how to get millions of people to use free stuff doesn't mean they can figure out how to sell people coolness, hipness or identity. You suggested they market music, and "selling cool" is what marketing music is.

Vision of things to come: Google A&R guy brings $85,000 check to local garage band, tells them to spend it as they please to promote their band, but to make sure to remind their audiences that their band is only "in beta" and that their presence at the event has already been reported to Google Buzz and AdSense.

Effectively representing acts requires a lot of manpower and skill. Google would have to turn around and hire a bunch of the people they just put out of business. You certainly don't send a programmer in to manage dozens/hundreds/thousands of bands.

It isn't even wholly about the money. It's everything. You don't just flip a switch and say "Hey we're a record label".

It might be trivial for google to set up a site model for bands to sell music through, but it certainly doesn't make them a record label.

You know, I wonder about this sometimes. Despite the epic saga which is Microsoft, Bill Gates actually seems like the kind of guy who wants to make the world a bit better (for instance, see Project Tuva). If I was a man with a hundred billion dollars, I'd have no qualms spending half of that to make several very real and important problems in the world simply "go away."

Political backpressure shouldn't be a problem no matter what you do, since with that much cash you could easily buy the government along with whatever else you want to buy.

One reason might be that while the movie and music industries insanity is a disadvantage for them, it's a disadvantage for everyone else as well, and essentially raises the barrier to entry for competition. They have to deal with the RIAA's garbage, but comparatively, they are harmed less than their competitors, and thus gain a competitive advantage.

You know, I wonder about this sometimes. Despite the epic saga which is Microsoft, Bill Gates actually seems like the kind of guy who wants to make the world a bit better (for instance, see Project Tuva). If I was a man with a hundred billion dollars, I'd have no qualms spending half of that to make several very real and important problems in the world simply "go away."

Political backpressure shouldn't be a problem no matter what you do, since with that much cash you could easily buy the government along with whatever else you want to buy.

Do keep in mind that Bill developed a conscience after departing the helm of Microsoft. Doing good works after being a ruthless business man (to accumulate a vast fortune) is a time-honored tradition, usually something to do with trying to polish a turd.. I mean legacy.

You think there are rumblings about monopolistic practices now, imagine if the owned the whole music industry. Plus why would you want to buy the music industry? That would be like buying cattle with mad-cow disease.

How about if several companies split it? Google's not the only one who would like to remove the RIAA. Amazon could buy some, and Apple might like having its own artists for iTunes. Microsoft. Netflix. All the companies that make MP3 players. All of them (and the consumer) would benefit from control of music being transferred from the current owners to themselves.

Except then instead of iTunes having music from all the labels, they'd only be able to sell the music from just their own label. Better to win market dominance in selling all the music vs. the other stores, and use that pressure to make higher profits for yourself.

Your still thinking the old way. With digital distribution you can easily have cross label agreements. Say apple owned a 1/3 and Google owned 1/3. Google can agree to allow Apple to sell any albums Google owns digitally any way they see fit in exchange for the reverse. Similar agreements can be made with the final third even if it was broken up by a dozen different companies. Basically it would be the same agreement that ISP's have with each other that allows data to use the others network in exchange for the reverse.

A very, very bad idea. Google has enough power over content as it is. I'd hate to see them gain even more. Google already controls the most popular search engine and the most popular video hosting site (at least in the US. I'm not sure about the rest of the world.) Imagine if you could only find, say, music videos as youtube "rentals," or had to use a Google TV box for streaming internet radio. Sure, a lot of those technologies are open right now, and Google's motto is "do no evil," but do you really believe that Google wouldn't be able to lock their content down in an instant if their shareholders demanded it?

A very, very bad idea. Google has enough power over content as it is. I'd hate to see them gain even more. Google already controls the most popular search engine and the most popular video hosting site (at least in the US. I'm not sure about the rest of the world.) Imagine if you could only find, say, music videos as youtube "rentals," or had to use a Google TV box for streaming internet radio. Sure, a lot of those technologies are open right now, and Google's motto is "do no evil," but do you really believe that Google wouldn't be able to lock their content down in an instant if their shareholders demanded it?

I agree with the basic premise of what you're trying to say: Monopolies are generally bad. But I do not agree with all you're saying.

Shareholders cannot simply demand things. Google's duty to its shareholders is to make money, plain and simple. Shareholders have absolutely no reason to demand anything specific of Google if Google is making money, and they would have no ground to stand on making such demands. Google's system is obviously working. They are making money by the metric fucktonne. Why would they drastically alter the way they do business by performing a complete 180-degree turn in their policies and the ideas they've so strongly based themselves upon?

Again, monopolies are generally bad, but Google doesn't have to buy all the major labels. All they need is one. If they buy ONE of the "big four" and start offering sane licensing agreements that the world has been searching for (for both the content distributors AND the content producers), and start allowing their music to embrace this new possibility of distribution called the "Internet" (it's this fancy thing that's been around for a couple decades that none of the record labels like to acknowledge the existence of) other labels will simply have to follow suit or they will very quickly become irrelevant.

They should just buy those industries, and get the world rid of a plague. These industries' interest pushing is preventing all kinds of technological innovations and breakthroughs. A LOT of them affect major internet companies like google.

Microsoft, Google and Apple should buy them all, share the IP rights and then liquidate the corporations. Can you imagine the "W.... T.... F....." reaction in this country if the tech industry finally said "ENOUGH OF THIS SHIT!!!" and brought to bear its ~$1T in net worth to bear on this $50B pest?

Right now I'm picturing the totally meltdown on slashdot. Not just because we'd all be overjoyed to see the music industry annihilated and rebuilt, but because we'd actually have (at least in part) Microsoft and Apple to thank for it.

If Google bought music labels - then there is little doubt that Amazon music service, iTunes and other direct Google competitors services would be out of licenses and out of business shortly. Isn't that obvious? What interest would Google have to provide these competing services with creative work licenses? None whatsoever.

If Google bought music labels - then there is little doubt that Amazon music service, iTunes and other direct Google competitors services would be out of licenses and out of business shortly. Isn't that obvious? What interest would Google have to provide these competing services with creative work licenses? None whatsoever.

Google sells eyeballs to advertisers. If Google were to make all major label music free as in beer, then itunes et al would no longer be competitive but not because of monopolistic advantage by Google but for the same reason no one makes money selling air.

No one seriously complains that WebM being free hurts the market for 4C's h264 patent portfolio. Or that WebP hurts the JPEG patent holders.

Host a completely free website for artists. They can post new songs that the artists own the copyright, sell them on the site, 100% revenue go back to the artists. Google will eat the transaction charge. Google will also invite top the chart (google's chart) artist to preform at Googles' campus, sponsor them to play at colleges.

Jamendo and others already do this. You can donate to the artists, or buy commercial licences. There's a lot of good music there, more than I really even have time to listen too. Every once in a while you run into something better than 'good' as well.

Part of the music industry (OK, a rather small part now) is about producing a physical product - actual albums. Google really doesn't have experience in that; the most significant physical product they ever made was a phone and it was a bomb. If they took the music industry and then abandoned the practice of making albums in favor of making all new music download-only, they would only further disenfranchise certain types of listeners.

And few companies are worse at recognizing the significance in custome

I think that the music industry is already grossly overvalued and would not be a wise investment.The US Government on the other hand that would be a valuable investment if they could just find a way to buy them off in bulk.Lets do the math.1 Prez, 1 VP, Chief of Staff, Secretary of state ect, Cabinet lets round that to 65 for ease100 Senators435 House of RepAs of January 2009, a total of 3,200 Fed JudgesSo we have about 4,000 monkeys to buy. Per yearAverage salary is probably around 180k. So we will offer them 10x the amount per year or 1.8 Million per worker.For only 7.2 Billion per year I think I could effectively own the entire federal government.I think google can swing that.

First, its called a monopoly. And already government scrutiny is strict when large record labels merge, much less when a company like a Google goes out to buy them.

Second, labels are ultimately as good as their artists. Even if hypothetically Google were able to overcome the international regulatory scrutiny to create a music monopoly, it doesn't guarantee that future artists will necessarily sign with the Google label. The reality of course is that in a competitive market new labels will arise, which th

Yes, they treat advertisers quite well. They treat cellular providers quite well, too; maybe you have to jailbreak Android phones, and maybe they use OHA membership as a kudgel to restrict competition in the handset market, but that's what the customers, the Samsungs, HTCs, and Verizons, want. Protip: Google's free services don't have customers, they have users; it's a critical distinction. Search Google's help documetns and you will never find a Gmail acco

And as long as the dictator remains benevolent, he can allocate resources in a way that makes sure the problem stays solved.

I'm for planning for things like health care provision and military expenditure, bridge building, public goods, all that stuff. But this is about deciding how musicians get paid -- that's what record labels do, they're negotiating for on behalf of the rights holders and royalty beneficiaries.

Do we really want to pay artists through a command economy? Are music consumers really so stupid they need to be "protected" from paying high prices for a CD by a paternalistic super-distributor? I mean, if Google owned "all" of the record labels this would be the result, and if you didn't agree to Google's rates your music would not be sold.

This is just a bad solution to a bad problem, and would make Google the biggest benefactor and advocate of copyright extension. Copyright extension is the problem, solve that.

I don't know why Google, Apple and MicroSoft don't create a consortium to do this, something akin to the RIAA. Maybe like the CIA-A. (Content Industry Association of America). That would alleviate any "monopoly" concerns.

Before you post a comment about how the antitrust authorities would never permit Google to buy all the music industry, read TFA or at least this extract:

Of course, the anti-trust authorities around the world would definitely have something to say about this, so it might be necessary to tweak the idea a little.

How about if a consortium of leading Internet companies - Google, Microsoft, Yahoo, Baidu, Amazon etc. - jointly bought the entire music industry, and promised to license its content to anyone on a non

Either Google music service can make money (ad supported or whatever) or not. Either they're making a profit on the backs of the music industry, stealing the very food from Howard Stringer's grandchildren, or they're not. If not, Google should be able to own the entire industry and make money from it.

Alternately, they could buy the music industry, dissolve the companies, and put the entire catalog on their servers. New content would then come from much smalle

Why not just approach all bands popular that have due contracts and sign them and start their own less restrictive label and bring change to the industry...

This will cause the Music Industry to Panic and make bands sign very long term contracts with very restrictive conditions which will make bands turn away from any label associated with the RIAA..

Once Google has success things will begin to change... and its highly likely Googles success will also been seen by artists unlike what goes on with the RIAA labels where artists see is the short end of the stick of success..

Buy label, replace management, place Google employee's on the board of directors, spin off label.

Google doesn't have to own them all simultaneously. They just need to get rid of the industry management and replace them with people who are friendly to the customers and search engines of the world. Google could hold a major stake in each company - but keep the % low enough not to warrant a fed investigation.

EMI [guardian.co.uk] is for sale, as of three days ago. They're owned by Citicorp, the bank. A venture capital firm defaulted on their debt, and Citicorp ended up with EMI. Citicorp wants to unload that unwanted asset for cash.

There was talk of Warner buying EMI, but Warner has financing problems of their own. Either Google or Apple could easily pick up EMI right now.

I always wondered why companies like Microsoft and Intel gave a crap about DRM or what the movie studios/music industry wanted. They are much bigger and have a lot more cash on hand.

It is obvious why Sony cripples all their products - because they are also a studio. But if you adopt a different model - one of selling online services or hardware, the content just becomes a value-add. Then you can enable whatever you want and tell the other studios to get on board or go to hell. On-demand, DVD, etc just needs to cover your costs.

The music industry has already lost. They lost it in 1979 when the compact disc was released. At the time, there were no PCs, 650 MB was a huge amount of data that couldn't be stored cheaply by other means, producing a CD required a factory, and strong encryption was hardly possible to implement in a consumer-grade CD player. As soon as the CD-R was invented, it was possible for average users to make cheap lossless copies. When the Internet became popular, all modern music was already digitized; sharing it was just a trivial matter of compression and hosting. You might argue that the current legal framework lets the music industry inflate their prices, but really, it's hard to beat the convenience of being able to download almost any commercially available piece of music imaginable, DRM-free, for around $1 per track. The music industry was the first to be digitized on a large scale, even before the movie and book industries, and are in a relatively weak position as a result.

The movie / TV industry was lucky to have the DVD come out after all those technological innovations, and learned from the music industry's misfortune. Today, the video market is so consumer-unfriendly that one could reasonably argue that piracy gives you a better product with fewer hassles. (If you pirate music, though, you're just a cheapskate.) For example, just try to purchase a movie without DRM, region coding, or unskippable segments. Try to purchase computer or video equipment without Macrovision, region coding, or HDCP. We don't even have a mainstream patent-free video codec. It's all those technological encumbrances that make the movie industry an even greater threat to the future of computing and media consumption than the audio industry ever was.

Surprisingly, the e-book industry is even more technologically backward than the movie industry. In addition to DRM, it also suffers from marketplace fragmentation. The display technology is new, and the handful of hardware manufacturers are as eager to control the distribution mechanism as the content publishers. The stakes are higher, too. If the music and movie industries manage to strangle themselves, we mainly lose a corpus of entertainment. If books are replaced by specialized gadgets with uncopyable, unlendable, unprintable, and remotely erasable e-books, that would be a serious step backwards for humanity.

Well, Google could buy one or two, Amazon another one to two, and so on (I don't know how many "and so on"s are necessary because I don't know how many record labels there are... is there a label per vinyl copy, or...?)

If Google did a hostile take over of, say, two of the major labels, and then immediately offered favorable licensing terms to apple, amazon, and microsoft; then apple, amazon, and microsoft might get a clue as to what google was doing, and each of them might buy up a few labels themselves, and reciprocate the licensing deals with google. End result: everyone except the RIAA and the top music execs win, and no anti-trust. As long as ther

To make them go away. Google is incredibly frustrated with the terms that the big labels are insisting on if google wants to do cloud distribution of music, and the labels have the power to set whatever arcane rules they feel like. If google bought that power out from underneath them, they would instantly get what they want, and be in a position to market those same rights to their competitors for a fair market value.

If GooTube would use their awesome powers of awesomeness to publicly put pressure on the big media companies to lighten up about people using their content in freely-distributed videos. I'm not saying they should be okay with you posting the last five minutes of their latest blockbuster movie. I'm saying that they shouldn't pitch a fit when you choose to use their music in a video you make.